Bank of England is expected to keep the policy rate steady at 4.50% - BBH

GBP/USD is down on broad USD strength, BBH FX analysts report. 

Swaps market is pricing in 50bps of cuts over the next 12 months

"The UK January labor market data matched expectations and does not move the dial on BOE rate expectations. The unemployment rate printed at 4.4% vs. 4.4% in December, total regular pay was 5.9% y/y vs. 5.9% in December, and the policy-relevant private sector regular pay was 6.1% y/y vs. 6.2% in December."

"Leading indicators point to a softer jobs market. In February, the KPMG/REC permanent placement index remained in contraction territory for a 29th month in a row, and the DMP survey showed firm expected no employment growth over the year ahead. Moreover, the vacancies-to-unemployment ratio is below the 0.6 level that Bank researchers consider to be consistent with a balanced labor market."

"The Bank of England is expected to keep the policy rate steady at 4.50%. The BOE is also expected to stick to its guidance of a gradual and careful approach to further rate cuts. The UK economy unexpectedly contracted in January, but underlying inflation remains stubbornly high above 2%. The next Monetary Policy Report with updated macroeconomic projections is due in May. Over the next 12 months, the swaps market is pricing in 50bps of cuts and small odds of an additional 25bps cut.